Chinese investment in Cambodia to diversify into SME finance

Chinese foreign direct investment (FDI) in Cambodia is expected to diversify into finance and banking in the near term, offering microlending services to small and medium sized enterprises (SMEs), said Peter Wong, Southeast Asia and South Asia regional director at the Hong Kong Trade Development Council (HKTDC).

“There is market potential here. Right now, the statutory governing body (in China) is not that complete or rather it is not very comprehensive, so there is a lot of grey areas. This makes it difficult especially for SMEs which want to borrow from banks,” Mr Wong said.

Speaking to Khmer Times on the sidelines of a business mission event organised by HKTDC, he said SME microlending is the way to grow the sector.

“I think it is a positive area as it is needed. Chinese investors are interested in developing these types of institutions although they are aware that there are more than 40 financial institutions operating in Cambodia,” he added.

There are now just a few China-based banks operating in Cambodia, including the Industrial and Commercial Bank of China and the Bank of China, as well as microfinance lender Prince Microfinance.

Yum Sui Sang, the chairman of the Hong Kong Business Association of Cambodia, said most participants at the HKDTC’s meet-and-greet session were representatives of the financial sector, including bankers, as well as professionals in the telecommunications and insurance sectors.

Mr Yum told Khmer Times that the Chinese financial industry is currently studying the local market to identify the areas that have the greatest investment potential.

HKDTC helps build business connections by promoting partnerships between potential foreign investors and local players, he said.

Earlier, Mr Wong said in his speech that Hong Kong is Cambodia’s second largest FDI source, accounting for $347 million last year.

“I am sure there is more room for business ties between the two economies to continue growing. Recently, Cambodia benefitted greatly from rising production costs in China and the resultant realignments in the supply chain.

“The country has been attracting private and public investments in infrastructure, manufacturing and the logistics sectors that added momentum to Cambodia’s economic development,” he said.

The fact is, Mr Wong said, Cambodia is an important country under the Belt and Road Initiative (BRI), and more trade opportunities will emerge between Cambodia and mainland China, with Hong Kong serving as a platform for professional services and a financial centre for investment.

“In terms of supporting the BRI, HKTDC connects businesses and capital to projects and opportunities across different countries with our wide array of events and platforms. We hope that through our channels, quality manufacturers, suppliers, traders and investors can jointly tap into the burgeoning Asian and international markets,” he added.

He noted that the Asean-Hong Kong free trade agreement, expected to come into effect in January, will further strengthen economic ties between Hong Kong and Asean countries by facilitating the flow of goods, services and investments.

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